It isn't hard to accept money on an address that is known to be associated with you and then transfer it to an address that is not known (cannot be proven) to be associated with you. An extreme form of this is called coin mixing or coin joining, but for most of us, I would think, that level of address obfuscation will not ever be necessary. Or if it is then you can imagine it will be automated.
Think about what that means: people are expected to maintain multiple accounts, pay people to launder money between accounts, and never make a mistake, or fail to predict what financial activity today will become a problem later (did you donate to Planned Parenthood when Roe was the law of the land? Better figure out how to remove that from the blockchain before your employer transfers your job out of a free state. Oh, wait, it’s not possible - better just hope nobody ever thinks to look!).
Major criminals get caught making mistakes on that kind of thing, there’s no way normal people aren’t going to make mistakes – and that’s before you think about what using a mixer actually means: lighting a neon sign saying “something about this transaction is dodgy, examine it!”
You are overstating how easy it is to track and how hard it is manage multiple addresses. As more addresses are used it gets harder and harder to track. Your employer will not have the resources to do it. Hierarchical wallets make it really easy to use and keep track of multiple addresses today, and more privacy schemes are in progress, see: https://river.com/learn/what-are-schnorr-signatures/
It's true that it is not completely anonymous, but it is a huge improvement over the current system we are discussing here. Add that to the other benefits Bitcoin has and I still feel like it's a huge win.
Here's also a flip side benefit to the public ledger. Businesses can, if they choose, cryptographically prove that they have the funds they say they have. Think of the value of that
> As more addresses are used it gets harder and harder to track. Your employer will not have the resources to do it.
First, following a chain is not as hard as you’re making out and there are existing companies which provide that service, which they’d pay just like they do credit reporting agencies - made easier by the fact that they’d be providing most of your income so it’d be starting with a known point. Mixers can be defeated but simply using one is a red flag.
Second, ordinary people are not going to perfectly follow a complicated setup – it’s not just that they make mistakes, although that’s a certainty, but also that they already aren’t interested in Bitcoin’s higher costs and slower transaction speeds so making those characteristics worse will not increase adoption. “Harder to use, costs more, still less secure than cash!” is not a compelling ad.
> Businesses can, if they choose, cryptographically prove that they have the funds they say they have. Think of the value of that
You mean they can make the same statements which businesses have been making since ancient times? The problem with all of these systems, as FTX customers can attest, is that the hard part isn’t counting what’s in your ledger but dealing with the real world outside – even if you can see all of my Bitcoin, you can’t know whether I have unrevealed debts or am about to be sued, etc. Since businesses run on credit, that means you still need auditors and courts to deal with the parts of the problem which aren’t simplistic enough for a blockchain.
Yes, following the chain of addresses is pretty easy, but proving who owns which address is not.
Using the new tech like Schnorr signatures is not "a complicated setup" that "has to be maintained perfectly." It is (or will be soon) built-in to the wallet software. You won't have to think about it. Maybe you read a lot about early Bitcoin wallets that didn't even provide unique addresses for each transaction (was that ever even a thing?) but times have changed. The ecosystem just gets better and better.
Also, did you read the article I linked to? In another thread I provided some more explanation and links:
All the chain analysis you have heard of is based on likely patterns and typical behavior of address use in common Bitcoin wallet software. New signature and script schemes have been added to Bitcoin in the past several years that disrupt those patterns and make it even harder to find connections between addresses.
On the business transparency, you seem to completely ignore the cryptographic proof businesses can provide, that's not the same statement that businesses have been making since ancient times. It's a mathematical guarantee. All the rest you point out is true though, and so you are right that it's not a total elimination of potential fraud.
> On the business transparency, you seem to completely ignore the cryptographic proof businesses can provide, that's not the same statement that businesses have been making since ancient times. It's a mathematical guarantee.
It’s a mathematical guarantee in the same way that a bank statement is. It’s extremely rare for the problem to be counting things rather than undisclosed debts, embezzlement, etc. and that kind of thing is just as much of a problem for a Bitcoin user because the real world isn’t on the blockchain. If I look at your balance now, that doesn’t mean that you didn’t borrow 90% of that balance from someone else, neglect to mention that you have paid taxes, transfer it the instant after I signed a contract with you, etc. In all of those cases, we end up in a courtroom where a napkin with the CEO’s signature saying “IOU $1,0000,000” and a witness has the same legal weight as the Bitcoin network.
And sorry, I know I should but I can't just let this go. You keep comparing Bitcoin to cash, as if cash is the solution to the unbanking problem we are talking about. You say this about Bitcoin vs. cash:
“Harder to use, costs more, still less secure than cash!”
None of those are absolutely true. For a local transaction in small amounts, yes, cash is easier and cheaper. For large transactions or for transactions with someone who is geographically far away, cash loses on all three of those, big time. I don't even need to explain why do I?
